Thursday, July 17, 2014

I will begin this SITREP by re-posting the video of the interview made by Ukrainian TV by phone with a solider of the Ukie forces in the so-called "southern cauldron". Please make sure to press on the 'cc' button to get the English subtitles:Speaking of videos, the I wanted to point out that the video I posted yesterday of what appeared to be Grad systems firing a Ukie forces from inside Russia included the voice of the person filming it who was saying "this is how much fun it is in the city of Gukovo - the Grads are firing" so unless this is all a fancy setup, it appears that it was shot from inside Russia.This morning Russian TV has shown footage of wounded Ukie soldiers who sought refuge in Russia and who were dispatched to various regional hospitals. So even though the western corporate media and politicians and, of course, the junta in Kiev are remaining completely silent about all this, there is overwhelming evidence that the Ukie forces in the southern cauldron were completely routed resulting in a collapse of the Ukie battle plan.Poroshenko's surpriseDo you remember how Poroshenko promised that if the Resistance did not surrender at the end of his truce he would go to 'plan B' which would be a big "surprise" for the Resistance? Well, what exactly his surprise plan was supposed to be is now obvious: the Ukies used the week of the so-called 'truce' to concentrate practically the entire Ukrainian military along the perimeter of the Resistance frontlines. Then, the Ukies attacked with an overwhelming superiority in numbers in Luganks and Donetsk. The plan was clearly to draw as many Resistance forces away from the southern part of the combat area and to then swiftly move Ukie forces towards the east and northeast along the Russian border to basically surround the Resistance forces and cut them off from their resupply lines from Russia. How in the world the Ukies seriously believed that the Russian GRU would ever fall for that is, frankly, beyond me. I have no facts to back the following assertion up, but having a pretty good idea of how the GRU works, I am absolutely certain that a) the GRU has agents on all levels of the Ukie hierarchy b) that the GRU has recon units everywhere in the combat zone c) that the 6th GRU directorate intercepts every single electronic communication in the eastern Ukraine d) that Russia is using its airborne and space assets to monitor every inch of Banderastan and finally e) that Strelkov and Borodai are working 24/7 with GRU liaison groups. What I saying is that it was pure folly to expect that the planned envelopment movement right along the Russian border would ever take the Resistance forces by surprise. And, of course, it didn't.Putin's "surge"During the past two weeks or so there were more and more signs that the Resistance forces were suddenly 'finding' more and more military equipment, more and more volunteers were coming across the border and that even some very heavy equipment began to literally pop-up 'here and there'. Of course, the Resistance declared that all these were trophies taken from the Ukies, but never gave any specifics. One more thing also "surged" from Russia: money. In fact, so much money appeared "out of nowhere" that Strelkov and Borodai could announce that they were pay pretty good salaries to those who would join the Resistance forces. The effect was apparently sufficient to delay, and possibly even cancel, the idea of declaring a full mobilization and conscription. It is likely that while the junta and its western allies did have a general sense that these accursed Russkies were up to no good, they probably did not realize the magnitude of this change the main consequence of which was the Strelkov apparently had enough men and resources to repel and attack in both Lugansk and Donetsk while at the same time trapping and destroying the "surprise" force the Ukies sent to envelop the Resistance.Strelkov's own surgeBut this is not the full story yet. Something else of immense importance happened during the past couple of weeks. There is more and more evidence that a certain number of key people in the Donetsk-Lugansk area were conducting very discrete negotiations with the junta in Kiev to strike some kind of deal. The two figures most cited in this context are the oligarch Rinat Akhmetov (who more or less owned all of Donetsk) and the Mayor of Donetsk Alexander Lukianenko. A third figure possibly implicated to some degree in these behind the scenes negotiations was the chief of Novorussian Security Service and commander of the famous Vostok Battalion Alexander Khodakovsky, though his role, assuming there was one, was either minor or non-committal, as we soon shall see. Finally, there is some pretty good evidence that a toxic mix of Russian oligarchs and Kremlin insiders (those I call the "Atlantic integrationists") were also in the loop. What their final plan really was we will probably never know (after all, they were busy negotiating it), but some kind of semi-surrender of the Donbass was clearly its key feature. So we could roughly identify two camps on the Russian side:a) Russian oligarchs, some Kremlin "Atlantic Integrationists", the Mayor of Donetsk, Khodakovsky and a few Russian intellectuals such as Kurginian.b) Russian security services, the Kremlin "Eurasian Sovereignists", Borodai and Strelkov plus a few Russian intellectuals such as Glaziev.All the plans of the first group completely collapsed when Strelkov, in a surprise move for everybody, suddenly withdrew from Slaviansk and appeared in Donetsk with a large contingent of heavily armed fighters. The Mayor Lukianenko feld to Kiev, Kurginian was given a most hostile "reception" and was almost arrested, as for Khodakovsky, he lost his position of Chief of Security but retained his position as commander of the Vostok battalion. As for the oligarchs in Moscow, they could only watch in abject disgust how Strelkov, Borodai and Antiufeev (respectively in charge of military, political and state security affairs) - all men with strong connection to the Russian secret services - were giving a joint press conference in Donetsk. Clearly, the Russian secret services and Putin's "Eurasian Sovereignists" have won again: the plans for a surrender were scrapped and those in favor of such plans either replaced or demoted. All the Novorussian forces were brought under a single command (Strelkov) which restored the sacro-saint principle of Russian warfare "единоначалие" or "unity of command". By the time Poroshenko sprung his "surprise" Strelkov and Putin were fine ready.The Ukie collapse

I am still unsure about many details, but at this point in time, the tally seems to be as follows: the forces sent to the southern cauldron have been practically wiped out, possibly with some artillery support from across the Russian border. A column of Ukie forces made it to the Lugansk airport, but with huge losses and with no further plan other than to resist as long as possible. For all practical purpose, this force is "out" in an operational sense (even though its mere presence remains a threat to the Resistance which will have to allocate enough forces to contain it). I am most unclear about what exactly happened to the Ukie force which attacked Donetsk. My understanding is that it fought itself into a stalemate against the Resistance and withdrew to regroup and reorganize. So with the exception of the forces sent to the "southern cauldron" the Ukies did okay tactically, but on an operational level the Poroshenko surprise resulted in a complete failure.The predictable reaction in Kiev and WashingtonThough neither Kiev or Washington have admitted their latest defeat, in fact they did not even mention it by a single word, both capitals reacted by doing what they do best: the junta lashed out at the civilian population and engaged in a vicious and systematic artillery strikes campaign against civilian neighborhoods while the USA announced yet a new round of sanctions against Russia. As for the European "great supine protoplasmic invertebrate jellies" (to use the words of Boris Johnson, Mayor of London), after spending a week saying that they were opposed to sanctions, they showed their usual prostitution, obeyed Uncle Sam's command and also adopted a package of sanctions. When asked about these latest sanctions Putin could not dismiss his contempt for the US Administration:

As for sanctions, they usually have a boomerang effect, and without a doubt will force US-Russian relations into a corner. This is a serious blow to our relationship. And it undermines the long term security interests of the US State and its people. It is regrettable that our partners have chosen to impose new sanctions, but Russia will not close doors to negotiations. We're open to finding ways out of this situation. I really hope that common sense and the willingness to resolve all issues through peaceful diplomatic means will prevail.The measures taken by the US administration towards Russia, in my view, contradict the national interests of the United States. This means that, for example, large companies wanting to work in Russia after facing certain restrictions will lose their competitiveness compared with other global energy companies. We gave an opportunity for the largest US company to work in the Arctic shelf. So what, the States does not want it to work there? They are hurting their biggest energy companies. And for what? In order to, after making one mistake, insist on making another? This is, at very least, an unprofessional approach. Sooner or later, such methods of solving international problems will have to change, but the damages will have to be written-off as losses for those doing it. I would like to say that unfortunately, those who plan foreign policy actions in the United States (this is not a recent observation but one pertaining to the last 10-15 years) are conducting an aggressive foreign policy and, in my view, a rather unprofessional one, because whatever they do, there are problems everywhere. Just look: there are problems in Afghanistan; Iraq is falling apart; Libya is falling apart. If General el-Sisi had not taken control in Egypt, Egypt would probably be in turmoil now as well. In Africa, there are problems in many countries. They touched Ukraine, and there are problems there as well.

So while Putin did not overtly call the Obama Administration stupid, he did call it incompetent and unprofessional. The Russian Foreign Ministry also chimed in and added that the USA had imposed new sanctions because:

The events in Ukraine have not developed the way Washington scripted them. The outrageous and groundless desire to blame Russia for the civil war in a neighboring country, which was caused by a deep internal crisis and already resulted in the loss of many lives, proves that the US and its clients in Kiev have failed to pacify the wide public dissent. We’ve said on many occasions that speaking the language of sanctions to Russia is pointless, regardless of their scale. This path won’t lead to any positive outcome. Those who believe in their own exceptionalism and claim the right to dictate their will to the world will be deeply disappointed. If Washington intends to ruin the Russian-American relations, it’s on their conscience, we won’t tolerate blackmail and reserve the right to retaliate.

I personally have no hope at all that all these appeals to common sense and even basic self-interest will have any impact on the US elites which have basically forgotten the subtle art of negotiations and who apparently sincerely believe that they can bully anybody into submission. The problem is that Russia is not in the least afraid of the US or, even less so, of the EU.Right now, the sanctions are "kinda" working. Some Russian companies have had their stock go down and there are some signs of capital flight - but this is mostly speculative capital. Capital invested in Russia has not - and, really, cannot - move out. Sure, the Hrivna is kept artificially high by western banks, but for how long can they sustain this worthless currency? Even more ridiculously, Standard & Poors managed to, I kid you not, upgrade Ukraine's credit rating from "negative" to "stable" because of the $17 billion bailout loan from the IMF. Yes, that's right. There are some folks out there making a terrific salary saying that when a bankrupt country engaged in a civil war get a loan its credit rating becomes better, not worse, if even the borrowed money is used exclusively to fund that civil war and pay the Ukie oligarchs for their "contribution" to the war effort. Amazing...The Russian response

During his tour of Latin America Putin spoke with the leaders of countries which represent more than half of the population of the planet. He signed a nuclear deal with Argentina, military contracts with Brazil, agreed to forgive 90% of the Cuban debt to Russia and re-open the Lourdes intelligence center on Cuba. So much for "isolating" Russia. But even more importantly is that the BRICS countries, following the example of Chavez' ALBA bank, agreed to created a common development bank with the equivalent 100 billion dollars in capital. To put things simply, the BRICS are gradually off-loading the dollar reserves while creating their own version of the IMF, but this time with real development, not imperialism, as a goal. The beautiful photo of the 5 BRICS leaders all joining hands and grinning together was a clear message to Obama: you cannot isolate Russia or, for that matter, any of us.Internally, Russia needs to actively pursue the program of "sovereignization" which Putin mentioned many time while keeping up the struggle with the "Russian 5th column" (also Putin's choice of words). Sovereignization requires a major systemic restructuring of the Russian economy and industry: more money must be made available at much lower interest rates than now, companies should be, how shall I put it, "convincingly encouraged" to repatriate their money from foreign and off-shore accounts (this can be done by, for example, only allowing companies incorporated in Russia to bid for government contracts), foreign non-western investment must be further encouraged (especially from China) and the Russian industry needs to be actively developed and diversified and the military industry must be made self-sufficient. The goal is not some kind of Russia version of juche, but the gradual disentanglement of the Russian economy from the western (primarily European) one. Asia, Latin America, India, Africa - these are the partners and friends Russia is seeking to develop.As for the Russian 5th column, it is not so much the overt pseudo-dissidents a la Nemtsov or Kasparov, but some oligarchs and their agents inside the Kremlin whom I call the "Atlantic Integrationists" (Medvedev, of course, but also a good chunk of the current Russian government and Kremlin advisers). The good news on this front is that the US policies towards Russia and the war in the Ukraine are giving Putin and the Russian secret services a perfect opportunity to turn the public opinion against these circles which, in turns, allows Putin to reduce their numbers and influence. Still, while these circles do not currently have the means to take action against him, they still hate Putin who would be well advised to always keep at least an eye over his shoulder as there are still a lot of traitors (what else should they be called?) in the Russian elites. These are, for example, the forces behind the current anti-Strelkov campaign lead by Kurginian and the anti-Putin campaign lead by pseudo-patriots who accuse him of having "sold out Novorussia". Now that the military tide has been turned, at least provisionally, these pseudo-patriots are taking a time off to recover from the shock and define a new Putin-bashing strategy, but they will be back at it very soon, of that we can be certain. Several well-informed observers have indicated that the next bashing campaign will probably be directed at Strelkov who, in the eyes of these pseudo-patriots, is what the French call an "empêcheur de tourner en rond" which can be very loosely translated as "party pooper", "spoilsport", or "killjoy": he is the man who crashed their behind-the-scenes attempts to make a deal with Akhmetov and the Kiev junta, he is the man with all the power in Novorussia, and he is the man who closely works with their worst enemy: the Russian secret services. His current popularity makes him untouchable at the moment, Kurginian completely failed in his attempts to smear him, but a war is the ideal setting to find a reason to smear a figure like Strelkov and they will definitely come up with something to get to him and, through him, to Putin.A provisional conclusion of sortsWhere do we go from here?First, we should not let the recent victories overwhelm us with a premature sense of optimism: this war is very far from over. For one thing it is pretty clear that the Resistance does not currently have the means to go on the counter-offensive and free the rest of Novorussia from Nazi occupation. Second, we can be darn sure that the US/NATO will dramatically increase their military, political and economic support for the junta in Kiev. I would not be in the least surprised if the US decided to send a group of retired US generals to replace the stupid Ukie generals who designed and implemented Poroshenko's "surprise" plan. Also, the Ukies might regroup and launch another attack, this time (correctly) concentrated on either Donetsk or Lugansk (probably the former). So again, this is very far from being over, in particular because history shows that civil wars are not ended by a peace treaty, but by the victory of one side over another.Just as I was writing this last sentence I saw a report that a civilian aircraft was shot down by somebody in the vicinity of Donetsk. So who done it? Here are some very preliminary thoughts:

First, the Ukies already did that once when they shot down Siberia Airlines Flight 1812 not deliberately, but out of their typical and total incompetence. Second, the Ukies had just announced that the Russians had shot down a Ukie SU-25 (which Russia denies, but which is quite possible), and I could see some Ukie smart-ass deciding to "retaliate" against a "Russian" aircraft. I don't see how the Resistance could be involved as it probably does not have the kind of missiles needed to reach a typical civilian airliner flying at a typical cruising speed and altitude. The Russian most definitely do, but they also have a well-integrated air multi-layered defense system which should have immediately identified the aircraft origin and ID even if, say, the transponder was malfunctioning. By the way, this also means that the Russians have the radar track of both the plane and the missile which hit it. My guess is that junta controlled forces did it, probably by mistake, but that this will be hard to prove as all the western "experts" will "cover" for Kiev and blame Moscow, and Moscow will blame Kiev, possibly with the recorded radar tracks, but that the "international expert community" will dismiss that as a "Kremlin orchestrated propaganda ploy" (don't you love the canned sentences used by the western media?). I sure hope that this was not some kind of screw up by the Russians (this is always possible, as the sad stories of TWA 800 or Aerolinee Itavia Flight 870 have shown.Stay tuned, I will try to continue to keep you posted, and don't forget the "donation": button on the left :-)Cheers,The Saker

UPDATE: come to think of it, the Resistance did get its hand on a Ukie base with some Buk missile systems so, alas, we cannot conclude that it *could not* have been them who down the MH17. My first guess is that the Ukies did it, but unfortunately it could have been any actor involved in the war.

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